1/6
The seeming paradox that stronger-than-expected economic growth in the US can actually undermine growth in developing countries by setting off capital outflows is further evidence, if more were needed, that unfettered capital damages the global...
wsj.com/articles/u-s-g…
The seeming paradox that stronger-than-expected economic growth in the US can actually undermine growth in developing countries by setting off capital outflows is further evidence, if more were needed, that unfettered capital damages the global...
wsj.com/articles/u-s-g…
2/6
economy. The widespread assumption that global productivity actually benefits from the free flow of capital implicitly assumes that, in the aggregate, investors mostly try to take advantage of productive growth opportunities and, by doing so, reinforce that growth.
economy. The widespread assumption that global productivity actually benefits from the free flow of capital implicitly assumes that, in the aggregate, investors mostly try to take advantage of productive growth opportunities and, by doing so, reinforce that growth.
3/6
But it's been decades since anyone (except the occasional economist) pretends that this is indeed the way the world works. International capital doesn't flow towards productive investment opportunities. It mostly flows to take advantage of expectations of short-term...
But it's been decades since anyone (except the occasional economist) pretends that this is indeed the way the world works. International capital doesn't flow towards productive investment opportunities. It mostly flows to take advantage of expectations of short-term...
4/6
asset-price appreciation. Unfortunately the recipient economies still have to adjust to accommodate both the inflows and the outflows, but now these adjustments have more to do with maintaining asset prices and protecting investors than with delivering productive growth.
asset-price appreciation. Unfortunately the recipient economies still have to adjust to accommodate both the inflows and the outflows, but now these adjustments have more to do with maintaining asset prices and protecting investors than with delivering productive growth.
5/6
At Bretton Woods both John Maynard Keynes and Harry Dexter White agreed that freeing up international capital flows was a dumb idea, even for sophisticated economies like the US and England. We really need to rediscover their insights and redesign the global...
At Bretton Woods both John Maynard Keynes and Harry Dexter White agreed that freeing up international capital flows was a dumb idea, even for sophisticated economies like the US and England. We really need to rediscover their insights and redesign the global...
6/6
capital regime, if only to make global capital and international banking less damaging. More US growth should always be positive for developing countries, and never destabilizing.
capital regime, if only to make global capital and international banking less damaging. More US growth should always be positive for developing countries, and never destabilizing.
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